The Great Resignation and Great Reshuffle have magnified ongoing efforts to stop pay inequity and gender-based discrimination against women, creating critical legal, reputational and competitive risks for companies that fail to act.
In 2020, the COVID-19 pandemic led to mass reductions in the labor force across many industries. According to an analysis of Bureau of Labor Statistics (BLS) data by the National Women’s Law Center, most of these pandemic-related job losses were experienced by women. In some cases, those losses may have been due to bias on the part of employers who identified women for furlough or layoff because of their perceived role as caregivers. In other words, it appears some employers assumed that women would not or could not be committed to work because they would be too busy fulfilling caregiver obligations when school, daycare or eldercare facilities were rapidly shutting down.
The Great Resignation followed in 2021, with record numbers of people quitting their jobs for a wide variety of reasons. With this shifting job market and pandemic-related conditions at home and at work, many women began reassessing their work conditions and leaving jobs they found unsatisfying or inequitable. A National Women’s Law Center survey found that at least some of the women who left their jobs did so because they did, in fact, take on the lion’s share of caregiving responsibilities during the pandemic. Another report similarly found that “women with children were significantly more likely than men with children to leave their jobs” during the pandemic. For some, the burden of additional responsibilities at home and lack of flexibility at work was unsustainable.
Indeed, Deloitte found that nearly three out of five women planned to leave their employers in two years or less, citing a lack of work-life balance as their top reason for wanting out. In a 2021 survey by market research firm Morning Consult, almost 20% of women said they never want to return to work in person, compared to just 7% of men. Others did not see remote work as solving the problem and felt they had no choice but to leave the workforce altogether. This feeling of being forced out of the workforce has been even harder for women of color. Emily Martin, vice president for education and workplace justice at the National Women’s Law Center, told the Society for Human Resource Management (SHRM) that “women of color face more obstacles in job-seeking due to conscious and unconscious bias.”
Now, in 2022, we have the Great Reshuffle. Many of those who left their jobs are returning to the workforce in search of more fulfilling work that better fits their individual needs. Employees are leveraging the demand for talent to negotiate better working conditions, and many are successfully finding better compensation, more flexible work hours and remote work options. In a recent survey, LinkedIn found employees are “demanding more work-life balance, the freedom to work where and when they want, and the support and empathy of their employer—and they’re ready to walk away from jobs that don’t meet their needs.”
But even with this leverage, fewer women are returning to the workforce than men. The BLS reported, “Men have now recouped all their labor force losses since February 2020, while over one million fewer women were in the labor force in January 2022 as compared to February 2020.” The BLS also found that unemployment rates were higher in January 2022 for African American women (5.8%) and Latina women (4.9%) compared to an unemployment rate of just 3.2% for white men.
The explanations for the slow return of women to the workplace are varied. Despite the existence of laws intended to promote the advancement of women in the workplace, progression to the C-suite lags and the gender pay gap not only remains, but has been further exacerbated by the COVID-19 pandemic. In the face of legal and reputational risks and amid the fierce competition for talented workers, employers must examine their policies and procedures to ensure compliance and more meaningfully advance equity for women in their workplaces.
Legislative Action to Support Women
Legislatures have grown more active in enacting new laws aimed at protecting women in the workforce. For protection against disparate treatment, women have historically relied on federal and state anti-discrimination laws such as Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of sex. Congress has since amended Title VII to include the Pregnancy Discrimination Act of 1978, which forbids discrimination based on pregnancy in the workplace. Additionally, the federal Equal Pay Act of 1963 (EPA) prohibits discrimination on account of sex in the payment of wages by employers.
More recently, in 2021, the House of Representatives passed the Pregnant Workers Fairness Act, which would require all public-sector employers and any private sector employers with more than 15 employees to make reasonable accommodations for employees and job applicants for known limitations related to pregnancy, childbirth or related medical conditions. The bill would not require employers to make any accommodation that would impose an “undue hardship” on business operations. In a notable reflection of the amount of such discrimination that still occurs in the modern workplace, the Congressional Budget Office has said that it expects the volume of claims related to pregnancy discrimination filed with the Equal Employment Commission (EEOC) to increase by about 20% in the first three years following implementation of any regulations related to the bill. The bill is currently in the Senate’s Committee on Health, Education, Labor and Pensions, and while there appears to be bipartisan support, the timing of a Senate vote is unclear.
Legislative efforts to prevent discrimination against women have ramped up at the state level as well. In addition to state laws prohibiting gender-based discrimination, nine states and the District of Columbia have enacted paid parental leave laws. These take different forms across California, Colorado, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, and the District of Columbia. In Colorado, for example, employers and employees will begin paying into the state-run insurance program to fund parental leave on January 1, 2023, and benefits will be available to workers beginning January 1, 2024. Paid parental leave will also be implemented in Oregon in 2023. These laws are aimed at helping employees balance their work and family responsibilities, accommodate the employers’ legitimate interests, and promote equal employment opportunities for both women and men.
Further, 17 states now have pay equity laws. Similar to the federal EPA, these laws are generally intended to address gender-based pay disparities by focusing on discrimination in the pay practices of employers.
Three Key Risk Areas
For employers, there are three key risk areas to focus on when it comes to preventing the unequal treatment of women in the workplace: pay equity, sex-based employment discrimination, and stereotyping based on caregiver bias.
1. Pay Equity
Despite federal and state efforts aimed at combating systemic gender-based wage gaps, women are still consistently paid less than their male counterparts. While some progress began in 2015 to narrow the pay gap, SHRM found this slowed notably during the pandemic. At the present rate of progress, SHRM reports that women will have to wait until 2060 to reach representation parity. As is often the case, the pay gap is wider for women of color. The Washington Post reported that an African American woman working in Washington, D.C., currently makes 51 cents for every dollar a white man makes. Ultimately, this pay disparity would add up to a loss of approximately $2 million over a 40-year career.
Pay inequities create significant legal risk. State laws are creating more avenues for women to make a case against their employers for sex-based discrimination in compensation. For example, Illinois and Colorado both require private employers to collect and produce demographic and pay data. Illinois requires employers with at least 100 employees to apply for an equal pay registration certificate from the Illinois Department of Labor, submit employee-level compensation data, and certify that their business complies with state and federal equal pay and anti-discrimination laws. Civil penalties for failure to comply can be up to $10,000.
In Colorado, the Equal Pay Transparency Act, which went into effect in 2021, prohibits employers from paying women (or men) less than other people for substantially similar work and requires employers to include a position’s compensation range when posting any job opening. This far-reaching law applies to any employer with at least one employee working in Colorado, including remote workers. Employers that violate the job posting requirements may be subject to civil penalties of up to $10,000 for each violation.
Employers can also inadvertently exacerbate the gender-based wage gap by seeking and relying on an applicant’s pay history when putting together an employment offer. If an applicant was underpaid at her previous job, then relying on salary history to set a pay rate in her new job would perpetuate the wage gap. There are now 21 state and local laws banning questions about an applicant’s salary history, and employers should expect more to follow. For example, employers in Kansas City, Missouri, are prohibited from asking applicants about their prior salary or pay histories. In Colorado, employers may not ask about an applicant’s pay history, nor can they rely on pay history to determine wages. The Colorado law also prohibits retaliation against a prospective employee for failing to disclose their pay history.
2. Sex-Based Employment Discrimination
When the EEOC’s 2016 multidisciplinary Task Force on Harassment in the Workplace outlined the biggest risk factors that create breeding grounds for harassment, it found the top risk factor was a homogeneous workforce. The EEOC defined this as having a “historic lack of diversity in the workplace or having only one minority in a work group,” including a team, department or office location. Companies should consider the implications in terms of women’s representation in their workplaces. Having fewer women may increase the likelihood of sex discrimination or sexual harassment for the remaining female employees. Further, there is considerable data that suggests hiring managers frequently favor candidates who are like themselves. Disproportionate gender representation among the workforce and, specifically, in leadership positions or hiring roles can significantly increase the risk of perpetuating underrepresentation of women and other minorities. Without conscious effort from organizations, these cycles continue—and so do the resulting risks.
3. Stereotyping Based on Caregiver Bias
In 2022, we will likely see more lawsuits alleging sex discrimination in the workplace based on employers stereotyping their female employees because of caregiver status. For example, in November 2021, a woman in Washington, D.C., filed suit alleging her former employer discriminated against her based on her “family responsibilities.” Her employer said that it discharged her for missing several shifts, but the woman countered that she was discharged because the organization did not want to accommodate her while she cared for her sick mother.
In another case filed in D.C. federal court in November 2021, a woman claimed her employer discriminated against her both on the basis of sex and her status as caregiver of a young child. The Massachusetts-based employer argued the employee did not have a valid claim because the state’s anti-discrimination law “does not recognize caregiver status as a protected category of workers.” The court agreed Massachusetts law did not explicitly cover caregivers, but allowed the woman to move forward with her caregiver claim as a “sex stereotyping claim.” The court held, “The Supreme Court and several circuits, including this one, have had occasion to confirm that the assumption that a woman will perform her job less well due to her presumed family obligations is a form of sex-stereotyping and that adverse job actions on that basis constitute sex discrimination.”
While caregiver bias is mostly argued by women, there has been at least one recent case in which a man claimed discrimination based on caregiver status. In a federal court in New York, a male nurse practitioner sued his former employer claiming that he was discharged, at least in part, because he requested paternity leave, which would be a violation of New York state law. The case remains pending.
How Employers Can Mitigate Risk
Understandably, many employers and human resources professionals are feeling overwhelmed with recruiting challenges around the Great Resignation and retention efforts during the Great Reshuffle. The potential issues posed by the unequal of treatment of women and caregiver bias can exacerbate those problems, making it even more important to address them effectively. Fortunately, there are several ways in which companies can limit their legal and reputational risk exposure.
Hiring: Employers should carefully consider and perhaps rethink minimum qualifications for positions. For example, few women hold general counsel positions in Fortune 500 companies. While it might seem reasonable to include prior experience as a general counsel of a Fortune 500 company as a minimum job qualification, such a requirement will certainly eliminate most women from the pool, thereby decreasing the likelihood that a woman would eventually be selected for the job. Instead of requiring a specific title to meet minimum qualifications, employers could consider candidates with several years of experience in a relevant role, even if the candidates have not yet had the opportunity to take on the higher-level title.
Return-to-Office Policies: The pandemic has changed the way people view working from home. Employers who want to increase diversity and decrease potential bias against caregivers should embrace giving employees autonomy to choose where to work. From the remote work arrangements of the pandemic, we have learned employees can often be effective working on their own schedules. For some, this might mean working after putting children to bed. For others, it may mean working early in the morning before their families get up for the day. For others, it may simply be personal preference. When feasible, giving employees the flexibility to set their own hours builds trust, improves satisfaction, and may lead to better productivity.
If a position requires in-person office time or set work hours, the company should consider explaining its justification in the job posting. Employees are more likely to be willing to come into the office or keep set hours if they believe the company is being transparent and the in-office time is meaningful.
Advancement Opportunities: Employers should be intentional about hiring or promoting women into profit-generating positions and leadership roles. Women are often assigned roles in cost centers rather than in profit-generating areas of the business. According to SHRM, “Male versus female CEO statistics show it is the profit-and-loss roles—such as leading a brand, unit or division—that set executives on track to becoming a CEO.” Women who advance to the C-suite, however, typically get there by taking on roles such as head of HR, legal or administration. Although these functions are important, these lines of work do not directly involve profit-generating responsibilities, and statistics show that they rarely lead to running a company.
To ensure that women can progress to these profit-generating and leadership positions, employers need to invest in the business advancement of women, ensure that female employees get meaningful face time with executive leaders, implement mentoring and sponsorship programs, and provide women the same training opportunities for advancement.
Monitor Pay Equity: As questions about pay history or current salary are prohibited in some locations, it is critical to train hiring managers not to ask applicants about them. Even in locations where there is no such prohibition, companies should avoid this practice because asking for and considering salary history information can result in future unfair pay.
Pay equity efforts should extend to existing employees as well. Employers should conduct pay audits to ensure their companies are closing the wage gap. Employers that fail to conduct self-audits face the possibility that their employees will bring wage gaps to the surface for them, potentially leading to legal and reputational damage. Conducting pay audits at the direction of legal counsel allows employers to maintain legal privilege over the results, which would prevent the audit from being discoverable in litigation and allow the employer to correct issues before any litigation is initiated.
The challenges of the COVID-19 pandemic have exacerbated historic and systemic employment inequities. Employers need to be aware of the broad range of legal risks posed by issues of inequity and discrimination and look for ways to mitigate their negative effect on women in the workplace.